In a speech to the National Press Club in Canberra on Wednesday, Fels said the system was failing patients while providing the government with poor returns on its investment of about $10bn every year.

“The commission’s view is that much of the funding from the commonwealth is neither effective nor efficient,” he said. “Much of this is payment for failure to treat the problems early and cost-effectively.

“We have to catch people before they fall.”

The key, he says, is to pour more funds into prevention, which was one of the main recommendations of the commission’s major review of the mental health system handed to the federal government earlier this year.

But Fels believes the government will be forced to put the option, worth just one per cent of the overall hospital budget, back on the table.

“I think this will come back to the government, no doubt,” he said. “They won’t go for a billion but they’ll have to do something along the lines we’ve suggested.”

Fels said one in two Australian adults will experience mental illness at some point. Australia’s suicide rate is double the road toll, with seven deaths every day.

The productivity loss from mental illness is worth about 1.75 per cent of economic growth and improving the mental health system by 25 per cent would deliver a one per cent improvement in gross domestic product, he said.

The federal government has set up an expert reference group, led by former beyondblue chief Kate Carnell, to map out a plan for how the commission’s recommendations can be implemented.

Ms Carnell has defended the government’s decision to exclude the key recommendation, saying hospital funding was a matter for the states and not the Commonwealth.

• Readers seeking support and information about suicide prevention can contact Lifeline on 13 11 14 or Suicide Call Back Service 1300 659 467